More investors favor growth stage startups in Southeast Asia

For Southeast Asian growth-stage startups, 2024 may be the year to shine brightly.?

In the last three years, early-stage deals dominated investors’ mind space. In times of disruption, the lure to be an early backer of something that can change a business-as-usual paradigm and exponentially grow in valuation is hard to resist. ?

Meanwhile, growth-stage startups struggled to stay afloat without much investor love after the pandemic struck and then strived to pave their way to profitability as money became expensive in the high-interest regime.?

This year may be a bit different. Even though most VCs will still prefer to write pre-seed, seed, and series A checks, some of them are diverting more funds for their growth stage portfolios.?

For instance, Singapore-headquartered VC firm Antler , one of the most active investors in Southeast Asia known to incubate nascent startups from day zero, plans to step up investments in slightly more evolved companies.?

While the VC will remain a day zero investor, it will now invest in up to Series C deals this year, especially seed to Series A investments, as per a report by Nikkei Asia. Another early-stage VC firm, based in Vietnam, Do Ventures is looking to double down on follow-on investments from its debut fund this year. It plans to invest in 5-8 portfolio startups.?

Moreover, the new funds focused on growth stages that were set up in late 2023 will be in full bloom this year.?

Last September, Indonesian digital bank Superbank partnered with Singapore’s Genesis Alternative Ventures to provide US$40 million worth of financing for Indonesian startups, primarily in Series B and Series C stages.?

Around the same time, the Merah Putih Fund, a VC firm backed by the Indonesian government, raised US$300 million intending to invest in Indonesian soon-to-be unicorns, including those at series C and series D stages. Similarly, San Francisco-based VC firm 500 Global raised US$43 million for its growth fund targeted at Southeast Asia.?

Moreover, many VCs may be willing to write bigger checks as well.

The case in point is Silicon Box. The Singapore-based semiconductor design and manufacturing firm landed a US$200 million Series B check earlier in January.?

While the deal can be taken as an outlier, given the company's semiconductor manufacturing background, it can also be a precursor to a trend in making. We are living at a time when generative AI and large language models are on the cusp of revolutionizing traditional sectors. And that means more and more funds will flow into this space.?

We will know as the year unfolds.

On that note, let’s live into this week’s recap.?

Buzzing Deals

• Singapore-based automotive tech company Motorist just bagged an investment from Tokyo Century Leasing (Singapore). The company didn't say how much money it got, but it is now worth US$60 million. This makes it officially a new scaleup, which Startup Genome defined as a tech startup that has a valuation of US$50 million or more. Motorist started in 2015 to help people figure out their car valuations, facilitate selling and buying used cars, and handle applications for loans and insurance. This new money will help them improve their services and make them easier for people to use. Now the company is planning to cater to drivers’ needs too. While in Singapore, 15% of vehicle owners use their app, the company is also present in Malaysia, Thailand, and Vietnam.
• Singapore-based bookkeeping automation startup Bluesheets just raised US$6.5 million. Illuminate Financial led this funding round, while Insignia Ventures Partners, Antler, and 1982 Ventures also joined in. Reportedly, Bluesheets is now valued at US$30 million. Founded in 2020, Bluesheets makes it easier for businesses to handle their financial data, streamlining their accounting processes and automating them by integrating with over 100 platforms. With the new funding, they want to expand their AI capabilities and focus on growth in APAC and the US.
• Digital asset trading platform Flowdesk just got US$50 million in a funding round led by Cathay Innovation. The Paris-based company plans to use this new money to grow its over-the-counter trading services and to get licenses for trading digital assets in Singapore and the US. Founded in 2020, Flowdesk ventured into Asia Pacific in 2022 with an office in Singapore.?
• Singapore-based advertising platform focused on Web3 Linkko just received an undisclosed investment led by Web3 Media (W3M) Ventures. Established in 2023, Linkko has a special way of targeting ads to people. It uses data from blockchain transactions to figure out who to show ads to, based on things like what kinds of transactions people make, what assets they own (like NFTs), and their net worth. This method lets the company create really specific profiles for each user. People who watch these ads can even earn some money, from a few cents to a few dollars per ad. Linkko plans to use the money to make its platform better, find more partners, and get more people to use it.

More Dry Powder for SEA Startups

Indonesia's AC Ventures has just closed its fifth fund, ACV Fund V, with a hefty US$210 million raised, including co-investment funds. The new fund is backed by global limited partners like the World Bank's International Finance Corporation and institutions from the US, the Middle East, and North Asia. Half of the backers are returning investors.?

AC Ventures focuses on sustainable impact and high financial returns, seeking out companies that not only offer economic value but also make a positive environmental and social impact. The VC has invested in over 120 early-stage startups in Southeast Asia and currently manages over US$500 million in assets across five funds.

ACV Fund V has already started writing checks from the new fund, leading rounds in Indonesian electric vehicle manufacturer MAKA Motors and sustainable farming startup Koltiva.

Parallelly, Singapore-based VC Clime Capital has raised US$127 million in the first close of its second greentech fund. Called Southeast Asia Clean Energy Fund II (SEACEF II), it is backed by Allied Climate Partners, Australian Development Investments, and the Global Energy Alliance for People and Planet.

SEACEF II aims to back early-stage projects in Southeast Asia focused on reducing carbon emissions. The fund will invest in renewable energy, energy efficiency, electric transportation, and electrical grid companies, among other projects.?

Clime Capital launched its first fund, SEACEF I, in 2020. So far, it has invested in twelve projects. And it is doing pretty well—the deals they've made through 2022 have brought in more than 27 times the money they originally put in.?

What Stood Out This Week

• Vietnamese tech giant VNG has canceled its plans to list on the US stock market for now.?The company filed for an IPO on Nasdaq in August 2023 with the aim to raise US$150 million. Now, it plans to file a new application in the future. The two-decade-old VNG, originally known as VinaGame, earns 70% to 80% of its revenue from the gaming business. It also has services like social media through Zalo, financial services with ZaloPay, and cloud services with VNG Cloud.?The development comes after the company indicated investors weren't quite ready for an Asian tech IPO. There was also a problem with slow revenue growth at VNG, partly due to a sluggish economy. If the IPO had happened, VNG would have been the first Vietnamese company to list in the US.
• Indonesian fintech company Xendit has recently laid off hundreds of employees. This move is part of their strategy to make their business more efficient and to better align their resources with their business goals. Mikiko Steven, Xendit's managing director, said that this decision was tough but necessary for them to focus on new growth opportunities.This is not the first time Xendit has reduced its workforce. They previously made cuts in August 2023, affecting a small group of employees from their product team. Xendit offers payment infrastructure and gateways for businesses in Southeast Asia. So far, they have raised a total of US$519.1 million.
• Alibaba co-founders Jack Ma and Joe Tsai have become the biggest shareholders of the company by purchasing over US$200 million of its stock in the last quarter of 2023. Jack Ma bought about US$50 million worth of shares and has now become the single largest shareholder. Joe Tsai, who purchased US$151.7 million in shares, is the second-largest. After Alibaba-owned media site The South China Morning Post published the news, the company shares in New York and Hong Kong saw a spike.?This came as a respite for the company which has seen its shares tumbling down to about US$74 at present from US$309 in 2020. In this period, SoftBank Group,? a major supporter of Alibaba, has been reducing its equity in the company.
• Singapore’s The Parentinc has acquired local baby-product retailer Motherswork for an undisclosed amount. The Parentinc runs theAsianparent, a website for parents in Southeast Asia, and owns a brand called Mama's Choice that sells halal products for pregnancy, nursing, baby care, and household. Motherswork, started by entrepreneur Sharon Wong in 1998, is a well-known retailer selling high-quality products for mothers, babies, and children. It has two stores in Singapore and ten in China.?Motherswork will help The Parentinc in growing offline presence given that about 70% of shopping in Southeast Asia still happens offline. The plan is to open more Motherswork stores in key places like Vietnam and exclusively sell products from The Parentinc’s consumer brand Mama’s Choice.

And that’s the wrap for this edition of #ICYMI We will continue to curate the weekly highlights of the Asian tech ecosystem in case you missed what made the buzz in the week that just went by. You can subscribe to #ICYMI to get it every Thursday to stay abreast of noteworthy tech developments.